Neel Kashkari on Wednesday launched an effort at the Federal Reserve Bank of Minneapolis to tackle racial and economic disparities, a problem that’s worse in Minnesota than four out of five states and is a top talking point at Minneapolis City Hall and the State Capitol.
Despite the persistent economic vitality of the state, the difference in median income between whites and blacks is $30,000, ranking Minnesota 41st in the nation, Kashkari told an audience at the Minneapolis Urban League. Minnesota ranks 40th in that same gap for unemployment, 40th for student test scores and 42nd for differences in high school graduation rates.
“We aren’t going to find a silver bullet in six months or a year, but we need to ramp up our efforts,” Kashkari said.
Kashkari is bending the role of a regional Federal Reserve president to new ends. He took a position usually devoted to bank regulation and interest rate policy, and last year oversaw a push to recommend changes aimed at ending the phenomenon of too big to fail banks and making the financial system safer.
This year the priority is an Opportunity and Inclusive Growth Institute. It’s conceived as a long-term fixture with the full support of the Federal Reserve System.
Fed Chairwoman Janet Yellen, in a statement, called it “an important research initiative focusing on some of the most pressing economic issues we face as a nation,” and said, “I hope that scholars inside and outside the Federal Reserve System will contribute to this important work.”
Kashkari uses a broad interpretation of the Fed’s dual mandate — keeping inflation under control and achieving maximum employment — to build a rationale for the initiative.
“If we have an economy that includes all our people, it’s just easier for us to achieve our mandate, which is a growing economy and maximum employment, and all of society would be better off,” he said Wednesday. “I wouldn’t be doing my job if I wasn’t trying to drive this kind of change and make people focus on these issues.”
The Fed will sponsor a series of conferences, start a visiting scholar program to study economic disparities and opportunity, and produce a series of white papers on the topic.
The initiative has attracted some of the world’s leading thinkers studying poverty and economic opportunity. David Autor, Raj Chetty, Kathryn Edin, Edward Lazear, Robert Putnam and Emmanuel Saez will be on the advisory board.
The initiative, Kashkari said, will focus not just on black Americans, but on all Americans struggling in the global economy. He mentioned miners on the Iron Range.
But his speech focused on racial disparity, and the setting was in the heart of north Minneapolis.
Urban League President Steven Belton asked, in a spirited question and answer session, whether the focus on opportunity “for all” is a retreat from the specific problem of a lack of black American success in the economy.
“Clearly, if you just look at the data, the communities that are being most left behind tend to be communities of color,” Kashkari said. “But I think the solutions we find that can help these communities can probably help everybody.”
Belton said groups already working on opportunity for black Minnesotans will be pleased with the Fed’s help, so long as the Fed stays in contact with them and allows the community to help shape the initiative’s guiding questions.
“People will be skeptical as we are of anything,” Belton said. “They will have to be very transparent and open about it being a nonpartisan agenda, but the wait and see is a healthy thing.”